expert Archives - annarborappraisal

Relocation Appraisal – hire an expert

The reason hiring a RAC member matters

Agents, employers, potential transferees; do you know what RAC is? Do you know why it would be important to consider appraisers who are members of this organization for the employee taking a buyout? In short, RAC is the organization that is dedicated to Relocation appraisals. RAC is the acronym for Relocation Appraisers & Consultants, and it is made up of peer reviewed experts in relocation work or those who have demonstrated expertise in complex residential appraisal assignments.

Why does this matter? It matters because the transferee has the option of taking a buy-out from their employer, facilitated by a third-party company that specializes in seamless employee transfers. The buy-out offer is made after two independent appraisals are obtained that address the positives, negatives, market conditions, and any unusual features of a property. These appraisals are not market value based, but based on a definition called “anticipated sales price”. Anticipated Sales Price (ASP) is actually a projection into the future, as to what a house will sell for within a specified period of time. It is not market value, which is back in time, forward to the date the appraiser views the property.

Appraisers who have expertise in this type of work are aware of the nuances in a market relating to what buyers expect, what types of repairs or improvements need to be made to put the property in the best position to sell, and exactly where it is positioned in the market as of the date of value. This means that odd floor plans are addressed. Dated cabinetry or flooring is addressed. Special features which may sway buyers to that property over others are addressed. The appraiser pays close attention to the market at the time of the valuation, and in particular the competition.

RAC member appraisers have this expertise and are the natural choice for any relocation assignment. When offering advice to your clients on choosing the right appraisers to complete these assignments, asking for RAC members to be included should be one of the first questions the client asks. It makes the transferees life easier, as well as your job as agent who will be handling the transfer. Don’t cut corners, go straight to the best, hire a RAC member today!

The RAC website is www.rac.net and I recommend that it be consulted in addition to the WERC website, with a search for “Worldwide ERC® Appraisal Trained” appraisers. The directory is found at https://directory.worldwideerc.org/18.aspx

Westridge of Dexter

Westridge in Dexter

Pass under the historic Dexter Railroad Bridge heading west, and on your right, along the curve towards Pinckney, is Westridge subdivision. Like many developments that took place during the housing boom of the late 1990’s and early 2000’s, this development was a roaring success until the local real estate market started to hit the brakes in 2005. Most houses in the development were built between 2000 and 2006, although there were a handful in 1999 and 2007. The remaining lots started to be sold off to individual builders and new construction began again in 2010. The development splits between these older and newer houses, with the newer houses primarily situated on the northern side of the neighborhood, although there are scattered newer houses throughout. Only a couple vacant sites remain at this writing.

Houses are tract built, but with variety. There is ranch style, colonial, and some transitional houses with first-floor owner’s suites. Many have walkout basements and back to wetlands or wooded areas. Some back to walkways or parks. There are smaller houses, just north of 1,300 sqft, as well as some larger houses closer to 3,000 sqft. The newer houses tend to be higher priced and with modern upgrades as expected.

Westridge has a fortunate location adjacent to the Huron River and attendant park systems. It is along the Border to Border trail, offering easy access to both recreation and to the city center through a well-maintained pathway. This is particularly attractive in that there are no walkways along Island Lake Road, near the Railroad Bridge, making pedestrian traffic potentially life-threatening otherwise. The pathway that connects the subdivision to the downtown core requires only a few blocks walk, and many buyers consider this a particular selling point for this development.

Newer subdivisions appear to have been hit fairly hard during the Great Recession, at least locally. Westridge was no exception. The Ann Arbor Area Board of Realtors, from where my research is gleaned, maintains listings back in time, but only in a robust manner to 2006. In a map search (above) of the development, I found sales back to 2001, but only a limited number. The data that follows is a scatter graph of all sales at their adjusted sales price, over time. Following that, is a yearly chart showing differences in sales prices per year, and at the end is information about current activity.

As is seen in this scatter graph, the market declined to a low point between 2008 and 2009, and current prices are well above the prices seen in 2001-2006 before the decline.

Laying this out in a yearly manner makes this information a bit more readable. The data below shows only median adjusted sales prices and price per sqft for simplicity purposes. Caveat on the data is that between 2001 and 2003 there were only minimal sales retained, and the number of sales started to increase in the MLS in 2004. Nevertheless, this information shows how the market declined over time and how it has recovered and exceeded previous prices. In the median adjusted prices, there is a blip upwards in price in 2005 followed by a decline to 2009. The 2010 price jump relates to size, therefore the next chart that follows shows price per square foot.

Looking at price per square foot the data shows the peak in 2003, declining steadily from 2004 through 2009. In my experience as a local appraiser, this appears more reasonable. I recall, in mid-2006 telling my husband the market had dropped around 10% and I didn’t see it going much lower. Oops.

The median Sales price since 12/5/17 (one year to the date of this writing) was $400,000 and the median asking price $420,000 on a 2,145 sqft house. There are currently two offerings in the development not under contract. The median asking price is $372,450 and a median 2,047 sqft house. Asking price is lower than the previous asking price of the sold properties by 11.32% and median size difference is 4.57%. Therefore, this information shows that prices may be down, as the asking prices are lower still than the difference in size. There are two properties under contract, and their median asking price is $369,900 and size 1,967 sqft. That means the asking price is 11.93% lower and the size is 8.3% lower, still indicating there is a decline potential.

Until we have a bit more data it is hard to call, but as an appraiser this information is meaningful, and I would not be calling the market increasing in spite the recent price increases noted in the charts above. For those of you actively participating in this market, please pay attention to “chatter” from buyers, sellers, agents and appraisers. Who knows exactly what will happen going forward, but there are indications that the market is changing.

Ann Arbor snapshot

So many ways to measure

Markets are rarely identical and what happens as a nation isn’t necessarily what happens in a county, or what happens in an area, or even a submarket.

We hear a lot about the improving market conditions that are occurring nationally, but as in all things real estate, the market really is fundamentally local. I live and work in the Ann Arbor market. Not all markets within this area are moving in the same direction, or at the same pace. Even within Ann Arbor there are differences, and the data below represents current information comparing the Ann Arbor school district as a whole to one area within Ann Arbor, area 82, which encompasses a wide market but is the west side of town as well as into the western suburbs and rural area within the Ann Arbor school district.

How can you go about measuring the market? There are a number of different ways, but what I am doing now (and I do change things up as I learn of new techniques) is taking one years’ worth of data at a time, run on a monthly basis and compare and measure how markets change. The data is run as one year periods because it neutralizes the seasonality that you see happening in this area. It is almost clock-work to see our local market start to slow after Labor Day, and to start to pick up in February or March, depending on the weather. In addition to measuring year to year, I have also eliminated from the data below distress sales and “to-be-built” properties because including them skews data. This is addressed in a previous blog post. Depending on the market, it might make sense to include the distress sales but Ann Arbor hasn’t had a lot in general (Thank You University of Michigan) and if they are included the market actually looks like it is picked up more steam than it truly has. Apples-to-Apples with the data below.

My findings are in graphic formats below with a small explanation underneath the graph.

Number of sales

We are seeing an increasing number of sales in both the entire market and area 82. For instance, the one year period of 2011 showed 805 arm’s length sales, and in 2012 there were 939 sales, 2013 had 1,054 sales for the year. Clearly the numbers of sales are increasing. In area 82 our market jumped from 210 sales in 2011 to 260 in 2012 and 299 in 2012. Based on this information the expectation is around 88 sales per month for the entire market and 25 per month for area 82. As there are 139 available properties in the MLS for the entire school district today (2/9/14) and 36 in area 82, there is about a 1.6-month supply for the overall market and 1.45-month supply for area 82. Looks like an undersupply of properties, doesn’t it?

Days on market

The chart above shows the differences in days on the market in both the wider Ann Arbor market and area 82. Area 82 consistently has had quicker absorption than Ann Arbor as a whole, but take a look at how the market dipped in both segments to a low point in June/July 2013 and has been increasing steadily since that time. My take on this is that as inventory has increased (as evidenced by the number of sales above) that there are more options and therefore houses are not selling quite as quickly as they were at the peak in 2013. At this time days on market is still very short with the most recent reading showing 43 as a whole and 35 in area 82. Surprisingly close to the expected absorption rate addressed in the graph above.

There are more graphs and charts that I will examine, but I am going to save that for the next blog post, so as to keep you interested and coming back J. These other indicators include the list price to sales price ratios, median price over time, and median price per square foot. They also include my favorite, the contract-to-listing ratio which some of you are aware of from previous blog posts.

Hope you enjoy this information and find it useful. As always, if you have questions about the market from the perspective of the local appraisal expert, call or write. I am always happy to field whatever calls or emails that I can.

Data above is culled from the Ann Arbor Board of Realtors MLS

Rachel Massey, SRA, AI-RRS www.annarborappraisal.com